Photo: El Estimulo retrieved

It’s been gratifying to witness the outpouring of emotion and respect for Teodoro Petkoff. But there’s one chapter of his life that obituarists have missed again and again. With few exceptions, his time as Ministro de CORDIPLAN has been commemorated with… silence.

I get it: it sounds boring. Powerful as the position was, Ministro de CORDIPLAN just doesn’t evoke the same drama as, say, Marxist guerilla. Or prison escapee. Or even editor-in-chief. Indeed, Ministro de la Oficina Central de Coordinación y Planificación is a title so boring that I’m not sure how to translate it into English. Planning Minister? Coordination Minister? Minister of the Interior? Snooze.

But don’t be deceived. It was as Minister—more than in his other roles—that Teodoro out-swashbuckled the competition. It was as Minister that Teodoro achieved something exceedingly rare: belt-tightening economic reforms without a popular backlash. Neoliberalism with a human face. The paquete without the –tazo.

There’s one chapter of Teodoro’s life that obituarists have missed again and again. With few exceptions, his time as Ministro de CORDIPLAN has been commemorated with… silence.

To understand the Herculean dimensions of this feat, recall how bad things were when Teodoro was appointed in early 1996.

Caldera was two years into his term. He had been elected largely on his excoriation of CAP’s reform program—but then he showed up without a plan of his own. Classic y-tú-qué-propones problem. As Francisco Monaldi and coauthors recount in their excellent analysis, Caldera dawdled responding to the banking crisis. He abolished VAT with a flourish, then sheepishly reinstated it when he ran out of money. Floundering at the end of his first year, he fixed the exchange rate and imposed price controls. Sound familiar?

By early 1996, there were rumblings from Fuerte Tiuna. Some even questioned whether Caldera would make it through his term.

Enter Teodoro. His mission was to raise government revenue or reduce spending or (ideally) both, without sparking another Caracazo—all in some of the worst external conditions (econospeak for low oil prices) in Venezuelan history. The new structural adjustment program, the Agenda Venezuela, had to be everything that CAP’s Gran Viraje wasn’t.

The first thing that Teodoro did was listen. He met with business leaders, congresspeople, and civil society organizations. He schlepped all over the country to hear people out. He led a long negotiation with CTV and Fedecámaras to reach consensus on labor market reforms.

I know, it doesn’t sound like rocket science. But compare this to what came before. CAP not only designed his paquete in near-secret. Incredibly, he didn’t listen even after the Caracazo. In May of 1989, CAP’s report to the IMF underscored his commitment to the original content and pace of the reforms. In April, he raised electricity tariffs and domestic mineral prices. It wasn’t until the end of 1991—nearly two years after the Caracazo—that CAP announced the so-called Megaproyecto Social.

The first thing that Teodoro did was listen. He met with business leaders, congresspeople, and civil society organizations.

Which is all to say, let’s not take Teodoro’s listening for granted.

And that wasn’t all. CAP’s Gran Viraje did contain a promise of direct subsidies for poor families. But Teodoro set an explicit and ambitious target: to increase social spending by 1% of GDP. In relative terms, that was a huge hike. There was a cash transfer for poor families with children. A doubling of old-age pensions. And when the Agenda Venezuela raised gas prices, Teodoro built in a clever subsidy to shield public transportation prices.

He was also a better salesman. On television and in print, Teodoro explained why the reforms were necessary and what people should expect. In place of technocratic gobbledygook about “balance-of-payments liabilities” and “current-account surpluses,” he said simply that when a government runs out of money and credit, it has to either raise revenue or reduce spending (or both). Unsatisfied with press appearances alone, he wrote a whole book about why liberal reforms would advance what had long been his goals: poverty reduction, growth with equity, and, ultimately, democracy.

The proof was in the quesillo. Teodoro and his Agenda Venezuela beat most of their targets. They projected a 1% GDP contraction in 1996, but the economy did much better than that, shrinking just 0.2% in 1996 and then growing 6.4% in 1997. The fiscal situation improved, too, and ahead of schedule. Compare this to the analogous figures for the Gran Viraje: a projected contraction of 2.7% for 1989 turned into a whopping 8.3% drop.

Many on the left see the CORDIPLAN years as the time when Teodoro sold out, compromising his principles for a taste of power. On the right, people think that his market-oriented reforms didn’t go far enough: if only Teodoro had floored the neoliberal gas pedal, the story goes, the economy would have done even better and Chávez would never have been elected.

These narratives are wrong. The fact that the CORDIPLAN years have been so absent from this week’s tributes is actually evidence of Teodoro’s success. The Agenda Venezuela is the structural adjustment you don’t hear about. The neoliberal reform without riots. The tax hike without public outcry. The labor reform without union opposition. The liberalization of gas prices, sin que pasara nada.

The Agenda Venezuela is the structural adjustment you don’t hear about. The neoliberal reform without riots.

Of course, the Agenda Venezuela was far from perfect. The oil stabilization fund was approved too late. Inflation continued apace. Contracts for private oil companies were overly generous (though that was not Teodoro’s doing). But the Agenda Venezuela doesn’t just compare favorably to the Gran Viraje fiasco—it compares favorably to basically any other market reform in the region.

It’s not an exaggeration to say that it was as good as tough reforms get.

Traumatized by the current crisis, Venezuelans sometimes see the second Caldera administration as prelude: the last, wasted chance to prevent disaster. To me, it looks more like a valiant effort sabotaged by the vagaries of the oil market.

What might have happened if oil prices hadn’t tanked at the worst possible moment? How would we remember Teodoro’s contribution if external conditions had buoyed his smart reforms, rather than dragging them down? If oil had ticked up to $20/barrel in 1997 rather than down to $10, wouldn’t Teodoro have been seen as the logical heir to a very successful presidency? Perhaps. And perhaps the kid from Sabaneta would be remembered as a footnote, if at all.

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36 COMMENTS

  1. I really like how CC always dares to dream big, surely, instead of an alternate future where socialism is out of the table, lets pick a future where is just ANOTHER marxist socialist guerilla/militant who gets to be head of state. Because you see, Teodoro’s socialism was the right kind of socialism, am I right? Hehe, that’s why the experiment failed, or actually, why it doesn’t count at all! Because it wasn’t the right kind of socialism, like my educated college professor told me so, had we had commrade Teodoro, a true* socialist, as head of state everything would have worked out just fine.

    Also, instead o saying “If oil had ticked up to $20/barrel in 1997 rather than down to $10, wouldn’t Teodoro have been seen as the logical heir to a very successful presidency?”

    We could might as well say: “If oil had ticked up to $2000/barrel in 2017 rather than down to $30, wouldn’t Maduro have been seen as the logical heir to a very successful presidency?”, because as long as the oil prices go up, we can sustain the right kind of socialism**

    * Until it fails, then it isn’t. Ask Bernie Sanders or anyone at the WaPo
    ** Until they run out of money again

    • All very true, altthough Dorothy’s article is excellent/well-written/informative. Venezuela had many Marshall plan oil incomes in the 60’s/70’s to easily convert its economy into a vibrant/healthy free market success. Instead, under the likes of Cap I/Caldera/et. al., we got massive corruption/grandiose massive money-gushing Govt. “investments” in the Guayana region/etc., all in the name of “nationalization”/national pride, and, in the end, increasingly financed by external debt, to end up eventually bankrupting the Country.

      • “Powerful as the position was, Ministro de CORDIPLAN just doesn’t evoke the same drama as, say, Marxist guerilla”

        Must be some other sort of Marxist ideology the one Dorothy was romanticing about.

        Or are we going to pretend Teodoro wasn’t a Socialist for the sake or an internet argument? Or the ministry of truth won’t allow us to remember those pesky details?

        • The author was not romanticizing Marxist guerillas. She was romanticizing the author of a (neo) liberal structural adjustment plan. That is what makes her piece such a clever and interesting take on Teodoro Petkoff.

          I am afraid the old cold war labels don’t work very well with that man. He advanced. As did history.

      • @Francisco Toro
        why do you feel triggered by that comment?

        Kinzo’s comment point out exactly what’s wrong in the article, and yet your only move is to denigrate the person who made that comment.

        Weren’t you the same person who released blog post about how badly the comment section has gotten with all the insults and the vitriol that were being posted lately? Or you are just another case of “Do As I Say Not As I Do”.

  2. Many people’s perception of Teodoro is quite the opposite. Dorothy must have spent weeks reading about this guy, she seems way too young to have experienced those times. I honestly don’t remember what he did or didn’t do for the economy, too lazy to study that kind of boring history. Much rather learn about Churchill and the second world war, for instance. Now that’s an interesting character.. What I do remember about Teodoro is he was rather leftist, izquierdista populachero, which led me to immediately dislike him.

  3. I thought this is a really interesting article, even though it’s short. I’d like to see it expanded and put into sections with a timeline showing political events, GDP (PNB), and oil prices.

    [Peripheral personal data: I wasn’t in the country during the period the article covers, and basically I wasn’t even following. I heard CAP was elected, then heard Caldera was elected again. I had hopes. Then I heard about Chavez, and closed the book, only to reopen it when I heard Chavez was dead.]

    The thing that gets me is the polarization of free market and socialist. The U.S. is free market, but half the government budget goes to “social programs”. HALF of it! I’m not swinging left all of a sudden. Far less of the U.S. budget should go to social programs which largely just encourage dependency, are frequently open to fraud, and threaten the country with an eventual bankruptcy and collapse. But it does seem to me that a recovery in Venezuela has to have a transition period in which socialism will tolerated until it can be phased out. Too many are dependent on government and oil. I don’t think it would be wise at all to just cut them off.

    Labeled socialist or not, I’ll listen to this Teodoro guy’s ideas and plans, because they seem to make some sense. Vietnam is a place I want to try to look into a bit. They seem to be opening up to free markets. If it goes in the direction of free markets and guarantees of private property, I’m interested.

    I’ve been advised by some that I don’t have a clue about Venezuela, Nena being the most recent admonisher. So this is all obviously just opinion to keep the conversation going on the comments.

  4. “Powerful as the position was, Ministro de CORDIPLAN just doesn’t evoke the same drama as, say, Marxist guerilla.” That’s hilarious, one of the best ones I’ve heard.

  5. Yet another piece glorifying college educated commies and playing world building on what could have been if… is like people never learn their lesson or they are truly so deluded/blindfolded commie rethoric chewed and spat back to them in the form of pretty words and promises, nevermind the fact that the guy killed people and was in a guerrilla, lets forget that for moment because he had a newspaper and had a way with words and all play make believe into what would happen if someone with that ideology became president…oh wait…something like that already happened…

  6. I see kico gets triggered rather fast. You should develop a thicker skin than your receding hairline if you truly want to make this a debate space. Unless only opinions of likeminded lefties are allowed in your hugbox. Hmmm could this be the censorship your fellow journalists complain so much about???

  7. God, ya just gotta luv the trolls – NOT. I doubt Kiko will delete your post, though you’re obviously trying to bait him. If you don’t like the editorial slant of this site, simple. Don’t read it. Don’t visit. And above all, if you don’t have something to actually contribute relevant to a topic, DON’T POST.

    • How comes everyone is a troll or a hater or jealous when they dare expressing an opinion different than yours? Besides he should be grateful someone bothers to read this leftie pamphlet even if is just for shits and giggles.

    • Me lei 75% del articulo. It seems like Teodoro was a man of words to communicate with all. But in CC parlance: “He was a dangerous dictator-in-the-making, very similar to Chavez! A populist is always dangerous. [Worse than Trump] he was not elected. He was appointed! And he obviously had problems running his mouth, instigating.”

      Many people in the U.S. don’t understand economics, and aren’t interested, apparently, in hearing the truth of things. That’s too boring. But a looney bartendress full of impossible promises [lies] even she demonstrably is incapable of understanding, gets elected, and the “economics” don’t matter. It’s her “look” and “fervor” that make the difference. Hopefully, maybe some in Venezuela would be more interested in economics. It’s always more “fun” to look at the personality, than it is to look at the man’s suggested economic policies.

      What I make of it all is that Teodoro was explaining the IMF proposals and plans in terms the average man could grasp, and he was doing it all in a manner that drew attention and interest. The article you linked to in El Estimulo describes him that way in glowing terms. I’ll get 90% of the world in disagreement with me on this next little bit, but I think Ortega in Nicaragua, proposed cutting social security payments and their equivalents, and also raising revenues through higher taxation, in order to bring the government budget closer into balance. The much-publicized protests are protests against that rationality of economics. The newspapers make it seem that Ortega is repressing “pro-democracy freedom fighters”, when in fact he is putting down overt ultra-left-wing violent Marxist agitators. That is: the protesters are not anti-dictatorship; the protesters are virulent socialists who are anti-capitalist. The protesters do not want LESS government; the protesters want MORE government [benefits]. If I’m right about that, and if Ortega can darle un salto a la talanqueras (switch sides), when confronted with the realities of government resources, debt, monetary base, and all, then perhaps Teodoro could, too. And perhaps he did. Either that, or the articles, here and the one you cited, are so slanted I got taken in by them.

      Still, anyone who can come up with a term “bobolongo” to describe someone who accused him of tooling around in a BMW, deserves a few minutes of time.

      • You can’t reduce existing pension amounts to balance your budget, in any economic model. That’s ludicrous.

        Current payments have to stay as is, with cost of living increases, and you have to create a window…maybe five years…where the amount for new claimants will be reduced. The U.S. may have to grapple with this as well.

        Now, I don’t know the specifics of the Nicaragua situation, but my guess is Ortega wants to reducing existing payment amounts.

        If I’m wrong, never mind, and sorry for wasting your time!

        • Now you made me look it up. I think this link will go through, and it’s a freebie: https://www.ft.com/content/65a32bd0-a462-11e8-8ecf-a7ae1beff35b

          Amid other things, he proposed to increase pension contributions. So you have compelled me to do two unpleasant tasks: 1) look it up, and 2) retract my error. Other things he proposed were an thirty-fold increase in vehicle tax, and a hike in utility rates. It’s an interesting article, a lot of “color” but also background factual stuff.

          (My central point is still that he was once a Sandinista Revolucionario, and now it was Sandinistas who led the protests against him – in part because he expropriated the free houses he gave them. His wife, who is also vice-president, writes mystical poetry, and he has been accused of much worse than Kavanaugh. Beat that!)

          • now it was Sandinistas who led the protests against him – in part because he expropriated the free houses he gave them.
            Do tell. Sources?

          • Boludo – I linked to the article, above. If you’re going to ask for sources when you have sources right in front of you that you won’t read, you must be a left-wing complainer-blamer. There was another article a few months ago that stated that some group that had been the lead street-fighting media front for Ortega’s revolution, was now again the street-fighting media front for the protests. You know, the “antifa” like morons. Where are your sources that refute this? Are you too busy printing up fake ballots in Florida, Arizona, and California to bother with facts?

            Here’s another article: https://www.nbcnews.com/news/latino/after-deadly-government-crackdown-nicaragua-s-student-protesters-reflect-what-n904151

            And a quote:
            “Hugo Torres, a guerrilla commander who once fought with Ortega during Nicaragua’s 1979 revolution and a retired general with the Nicaraguan army, said it’s natural that students who haven’t experienced such a struggle before would see a darker and suddenly more complicated future for themselves.

            “These struggles have their flows, like the tide, their ebbs,” said Torres, who broke with Ortega two decades ago and now is vice president of the opposition Sandinista Renovation Movement. There is time to mourn the dead, he said, but that doesn’t mean “your spirit falls or you give up the fight.”

            I’ll wait for your sources to refute this, but only for a day or two.

          • Hey, Boludo Tejano – Where did you disappear to? Just a hit and run blogger?

            There are right wing protesters in Venezuela, protesting left wing socialism. There are left wing protesters in Nicaragua protesting a roll back of socialism. Whom does it benefit to make people believe that Ortega is the bad guy who should be removed?

        • Ira – Actually, I just read two articles that say Ortega proposed reducing pensions by 5%. However, one of them was a Wikipedia article that doesn’t make much sense, since it states that a group of elderly people requested that pension decrease (????). Still, a second article does state explicitly that the 5% pension decrease was one of the proposals. The U.S. taxes Social Security benefits, which is in effect a reduction of “pensions” (social programs).

          Ortega also proposed hiking contributions to those government-run pension programs. Other factors that triggered (or were used a rallying points) protests apparently, as reported, a mishandling of forest fires and increases in electric utility rates, but part of the background was a cut-back or cessation of oil and money from Venezuela! My reading of the entire things is that “The Government” was out of money, and Ortega put forth proposals to try to remedy that, which of course the Good People of The Pueblo got up in arms about. “What do you mean, you won’t give us money?!! We’ll replace you with someone who will!”

  8. So, I found this article unpersuasive. I learned that Teodoro reached a consensus on some undescribed labor reforms, increased electricity tariffs and domestic mineral prices and increased social spending by 1% of GDP. Now, perhaps students of Venezuelan governance understand that his plan was far more ambitious than described but I do not know that and as a result am unpersuaded.. The described plan seems quite modest and,I am at a loss for the gushing praise it received. What did I miss?

  9. Cojones they have to use a picture of two major contributors of this debacle. I met his daughter while in Paris, and Theodoro himself occasionally he stopped to discuss with the many socialists that pollute la ”Cité Des Lumières”. What’s the point in keeping the idea that socialism could ever resolve any problem anywhere. Don’t you have enough? I’m against erasing the history and hate rewriting it.

  10. I should have said why they were contributes: Caldera was a Catholic and grandfather of Chavez and later pardoned him while in his last mandate. Both loved socialism to death. Entitlement was the key to open power to all (I mean the Chavez kind)

  11. Very good article from Dorothy Kronick ! It is easy to criticize from outside, specially if you have never lived in Venezuela…

    After 1989, things got very tough in Venezuela, they started to improve somewhat until the coups of 92 … Then came the bank interventions, of 94, more currency controls (OTAC) etc.

    1996 to 1998, while Teodoro Petkoff was Minister of Cordiplan, there was improvement in the general economy, even though the oil prices fell, control exchange controls were lifted in 96 (Did not see it mentioned in the article) , and there seemed to be light at the end of the tunnel…

  12. If, could have and should have, My wife was a director in CORDIPLAN during this period and in her words, cero a la izquierda is a better description of Teodoro’s time there.

  13. I am almost sixty years old, and I read the vitriol in the comments of CC and just have to shake my head, smile and wink. Good grief! A piece about the arguable merits of a technocrat (at the time) trying to rein in the economic madness of a paternalistic government model (going back all the way to the origin of modern democracy in Venezuela) is turned, in the eyes of some, into a socialism apologia because of one phrase by the author? The CC stuff a bunch of pinko adoring fans? Plzzz….

    Seriously folks, if you have something relevant to say about the substance of the article (the economic policy of Cordiplan during Petkoff’s tenure), then by all means let’s hear and debate it. Otherwise, you are just making an aging expat laugh (not with you, but at you).

  14. CORDIPLAN did not dictate economic policy, rather it was one of many contributors to the development and execution of the “Plan de la Nacion”. Teodoro’s greatest contribution, mostly through the works of Dr. Angel Hernandez, was the commitment CORDIPLAN had with La Descentralizacion. That, of course was kaiboshed immediately upon the supreme commanders arrival. Relinquishing any type of control was not in the works for Chabes.

  15. Great piece…

    It must be also noted that, in effect, these reforms were helped by the constructive effort of the parliamentary majority back in 1996 and 1997 around the Agenda. While Convergencia and AD tried to steer a majority of their own, it was Copei, Causa R and the MAS who effectively brought the votes to pull the budget and legislative deals in place.

    In turn, La Causa and MAS split over “neoliberalism” and Chavez, and Teodoro had no party base to run in ’98

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